The concept of a "time frame" might only seem unfamiliar to beginner traders who have recently started trading. In short, it is the period of the chart - second, minute, hour, day, etc. The terms “period” and “interval” as applied to the currency chart are synonymous with this concept. However, merely understanding the meaning of this term is not enough. The issue is important, so in this article we have decided to consider in detail what a time frame is, its role in trading and how to choose an appropriate period, and what the beginner should rely on.
What is a timeframe?
The term is defined as a period of time, especially a specified period in which something occurs or is planned to take place. With reference to trading, it means the time interval for separate elements to be rendered - a Japanese candle, a price bar, or a point.
There are many types of them. Classification is carried out according to various criteria, including relative duration - long-term, medium-term, and short-term. The exact value of the interval also plays a role, for example, 1 minute, 15 minutes or 1 hour, or a week. Let's consider this point in more detail.
Fractal structure of the chart
For a better understanding of the subject matter, a brief introduction is necessary. The market is a fractal structure. We do not plan to delve into the chaos theory by Bill Williams, but we will touch upon the essence of it. A fractal is a structure that has the function of self-similarity. Simply put, regardless of its scale, it retains its original appearance. For example, it is how the spiral shell of a snail looks in theory.
The candle currency chart meets this criterion exactly. Its period can be increased or decreased, but that will not affect its structure. For example, a 1-minute chart will look the same as a 1-day or weekly chart. With the naked eye it is almost impossible to distinguish between the M1 and M5-M15 timeframes. This is an almost impossible task even for experienced traders. That is, however, if they do not know which asset is being used, since currencies behave differently.
Time frame classification
Based on the fractal structure of the chart, it is possible to make a clear conclusion that the concepts of long-term and short-term are relative. Therefore, depending on the platform used, the classification will be different.
- Short-term Official graduation: from 1 minute to 15 minutes. In regard to short-term platforms like Binomo it is from 1 to 30 seconds.
- Medium term The average time frame is officially considered the interval from 30 minutes to 4 hours. With reference to short-term platforms, it's 1 minute.
- Long term The standard gradation is from 1 day to 1 month. On platforms for trading turbo contracts, a relatively long-term interval of the chart is a period of 5 minutes.
The use of short-term intervals can significantly save time. If the market does not have a sufficient level of volatility, then this may lead to decreased accuracy of the signals. But in any case, it does not play a key role.
How to choose a time frame - what to base it on?
Market volatility This is a key parameter. Low activity on the selected asset leads to the smaller chart intervals not ensuring the formation of complete candlestick elements. Multiple gaps will appear, which lowers the accuracy of technical analysis.
Trading approach Some traders prefer scalping (short-term trades), others trade within an hour or a work day, others open weekly trades, and yet others earn a profit on positions held on the market for several months or even up to a year. Short-term trading is most popular among beginners.
Strategy recommendation If a trade is conducted according to the step-by-step instructions of a specific system, then the recommendation given in the description should be followed. If desired, the system can be scaled to a longer or shorter time frame, but it is important to observe the initial ratio of expiration time to interval. For example, exactly 1 candles for 15-minute trades on the 4-second chart. Therefore, it is possible to scale the system to 4-minute trades on a 1-minute timeframe.
Novice traders can best trade on the second and minute charts. The use of longer periods is unjustified, since it significantly increases the time spent on trading. This is the choice of professionals who approach long-term trading with a real understanding of the essence of the matter.